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A new ruling in November could see fraudsters who lie to make false insurance claims facing a prision sentence.

It follows global law firm, Clyde and Co, successfully applying for the committal of three men at London’s Royal Courts of Justice this month.

The firm said this marks a “significant toughening of the court’s attitude.”

The three men were jailed for contempt of court following an attempt to make fraudulent personal injury claims against Admiral Insurance.

But unlike previous cases where fraudulent claimants were jailed for contempt of court, the men had not lied under oath during a trial but were handed prison terms nonetheless.

Ben Neyland, head of fraud at Admiral, said: “Our hope is that people who are approached by the organised gangs who run these schemes will take note that even though all three defendants had abandoned their original claims before getting to trial, the Court still felt it appropriate to hand down custodial sentences. This judgment sends out the important message that as soon as someone agrees to be part of a staged accident for financial gain, they run the real risk of imprisonment.

“Insurance fraud is not a victimless crime, it affects all motorists through higher premiums and staged accidents can put other road users at risk of serious injury or even death. We will use all resources available to us to root out fraudsters and scammers.”

Sentenced

Two were sentenced to six months imprisonment, reduced from nine months due to mitigation and the third was sentenced to four months.

The contempt proceedings were brought by Clyde and Co on behalf of Admiral Insurance after the three men from Liverpool abandoned their original claim when confronted with evidence of their fraud.

They were part of a larger fraud ring of over 150 people worth at least £3.2m, which operated in the Merseyside area.

And they claimed they had been involved in an alleged motor vehicle collision on the M57 and pursued individual claims for personal injury worth up to £80,000.

But the three men abandoned their claims after the law firm presented evidence that the collision had been staged.

Neyland added that he was satisfied with the verdict and sentence, and “that this result sends a clear warning to other criminals who think they can make easy money from making a false claim from a staged accident.”

Sit up and take notice

Damian Rourke, partner at Clyde and Co, said that it is a massive operation given the size of the fraud ring.

He said: “This is a significant judgment which will make potential fraudsters sit up and take notice.

“The Court has also sent a very strong message to claimants and their representatives. They need to properly assess allegations of fraud or impropriety rather than simply ‘reacting’ with denials and threats as such reactions may ultimately be very costly.”

Damian Rourke, parter at Clyde and Co

He explained that the promise of an “easy pay-out” needs to be carefully balanced against the very “real risk of a custodial sentence” which the Court has acknowledged arises as soon as someone agrees to be involved in a fraudulent claim.

Historically, the vast majority of committal proceedings have involved claimants who went to trial and lied in the face of the Court.

The decision suggests that a claimant who knowingly pursues a fraudulent claim is likely to receive a custodial sentence.